Annual Report 2012 - Swiss Life
Annual Report 2012 - Swiss Life
Annual Report 2012 - Swiss Life
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68 Market Consistent Embedded Value (MCEV)<br />
1 Introduction<br />
1.1 Basis of Preparation<br />
Market consistent embedded value (MCEV) is a measure of the consolidated value of shareholders’<br />
interests in the in-force covered business of the <strong>Swiss</strong> <strong>Life</strong> Group. Covered business includes life,<br />
health and pension business of the company. The Group MCEV is a measure of the consolidated<br />
value of shareholders’ interest in the covered and non-covered business in force of the company. Business<br />
in force includes business written as at 31 December <strong>2012</strong>; future new business is not included.<br />
The notion of market consistent embedded value (MCEV) will alternatively refer within the course of<br />
this report to the MCEV of <strong>Swiss</strong> <strong>Life</strong>’s covered business, of one of its market units, or to <strong>Swiss</strong> <strong>Life</strong>’s<br />
Group MCEV.<br />
<strong>Swiss</strong> <strong>Life</strong>’s market consistent embedded value reporting follows the European Insurance CFO Forum<br />
Market Consistent Embedded Value Principles ©1 . The cost of credit risk relating to bonds is calculated<br />
and disclosed in addition to the Principles’ mandatory requirements. Further details on the MCEV<br />
methodology and assumptions are given in sections 4 and 5.<br />
PricewaterhouseCoopers have audited this market consistent embedded value report. Their opinion<br />
is part of this report (section 6).<br />
1.2 Covered Business and Non-Covered Business<br />
Covered business includes all of <strong>Swiss</strong> <strong>Life</strong>’s life, health and pension business as well as assumed<br />
external reinsurance, with the exception of <strong>Swiss</strong> <strong>Life</strong> Insurance Solutions AG, which is not material<br />
for MCEV purposes. MCEV (and Group MCEV) are net of ceded external reinsurance. Included are<br />
namely operations in Switzerland, France, Germany, Luxembourg, Liechtenstein and Singapore. All<br />
other businesses such as investment management and AWD are generally included in the non-covered<br />
business at their IFRS net asset values, with the exception of France, where they are included in the<br />
covered business.<br />
1.3 Definitions<br />
<strong>Swiss</strong> <strong>Life</strong>’s Group MCEV consists of the MCEV for covered business and the IFRS net asset value for<br />
non-covered business.<br />
According to MCEV Principle 3, the MCEV represents the present value of shareholders’ interests in<br />
the earnings distributable from assets allocated to the covered business after sufficient allowance for<br />
the aggregate risks in the covered business. It is calculated on a post-tax basis taking into account<br />
current legislation and known future changes.<br />
Components of Group MCEV<br />
Covered business<br />
CEV<br />
TVOG<br />
CNHR<br />
FC<br />
FS<br />
RC<br />
VIF<br />
NAV<br />
MCEV<br />
Group MCEV<br />
Non-covered business<br />
IFRS<br />
NAV<br />
IFRS Equity<br />
1<br />
Copyright © Stichting CFO Forum Foundation 2008<br />
<strong>Swiss</strong> <strong>Life</strong> – <strong>Annual</strong> <strong>Report</strong> <strong>2012</strong>
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